The slow pace of unemployed workers returning to the workplace and a shortage of available jobs could lead to significant underemployment, the Israeli Employment Service warned on Tuesday.
Underemployment refers to a situation in which individuals are forced to work in jobs below their skill level or expected wages.
The warning comes as economic officials expressed disappointment at the slow decline in Israel’s unemployment rate. Data published in an Employment Service report on Tuesday showed that unemployment declined from a peak of 27.5% in late April to 23.5% at the end of May, or a total of 960,000 individuals.
While the pace of decline is expected to increase once the government’s employer incentive program enters into force, the Employment Service believes that the combination of record unemployment and a “dramatic reduction” in open positions will lead to a drop in employee negotiating power, lower wages and increased underemployment.
This undesirable combination is likely to impact several population groups, the Employment Service added, especially individuals already earning low wages.
A high rate of return to work was identified in professions including healthcare (27.7%), accounting and finance (26.7%) and education. At the other end of the spectrum, workers in the tourism and hospitality (6.9%), entertainment (9.3%) and aviation (9.3%) sectors remain overwhelmingly out of work.
Furthermore, significant and concerning disparity was identified in the return to work of different population groups. Only 9.2% of Muslim, Christian and Druze employees said they had recommenced work, compared to 20.7% of Jewish employees.
“We are concerned about the slow pace of return to the workforce, as well as the findings of this report that the weaker groups in the population are suffering the hardest blow during the crisis, and may be forced into a situation of long-term underemployment,” said Employment Service director-general Rami Garor.
“We must not accept the coronavirus-effect. The plan to give grants to employers, which we are leading together with the Finance Ministry and the Tax Authority, could certainly give momentum to a massive return of jobseekers to their workplaces.”
Responding to the report, Economy and Industry Minister Amir Peretz said he fears that Israel could reach the end of the summer with approximately 400,000 jobseekers.
“To succeed is to turn a crisis into an opportunity, and we are working on a broad, comprehensive and diverse plan to train employees, who will be quickly absorbed into the workforce,” Peretz said.
There was no change in May for the three towns and cities with the highest rate of unemployment, Beitar Illit, Eilat and Modi’in Illit, which all continued to struggle.
In Beitar Illit (38.6% unemployment) and Modi’in Illit (33.9%), the consistently high rate of jobseekers is largely attributed to the late reopening of educational frameworks and low levels of employees reporting their return to work.
In Eilat, the southern port city heavily reliant on tourism, the unemployment rate declined from 45.9% in April to 36.5% at the end of May.